Airline Stocks: United Airlines, American Airlines Earnings Due After Delta Restores Hope

United Airlines (UAL) reports first-quarter earnings on Wednesday, and American Airlines (AAL) reports on Thursday, as airline stock investors parse the impact of rising prices on travel demand.

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The carriers’ results land after Delta Air Lines (DAL) last week forecast strong demand ahead, despite higher fares and rising fuel costs. Delta said demand for its premium-class seating had helped drive its recovery. And the airline said it saw no pushback, yet, from consumers against the prices it was charging to fly.

The report sent Delta flying in the past week’s stock market trading. DAL stock soared 15%, reclaiming its 50-day and 200-day moving averages. As for other airline stocks, American Airlines stock also moved back above its 200-ady line, while United Airlines and Southwest Airlines (LUV) closed just below that key level.

Hotel stocks also were big winners, with Marriott International (MAR) breaking into a buy zone and Hilton Worldwide (HLT) clearing an early entry. Travel booking giant Expedia (EXPE) is nearing buy points.

United Airlines Earnings

Estimates: Wall Street expects United to lose $4.22 per share, according to FactSet. Revenue is seen jumping 138% to $7.669 billion.

Results: Due after the close on Wednesday.

United Airlines stock has a 50 Composite Rating and a 53 EPS Rating.

United Airlines and its rivals report in the wake of Russia’s attacks on Ukraine, which sent oil prices higher. As fuel and other goods get more expensive, analysts have grown more concerned that more consumers could turn away from vacations and other plans, following a two-year rebound from pandemic lockdowns and travel restrictions in 2020.

During the quarter, harsh winter weather forced flight cancellations. The omicron variant also sickened crew, disrupting flight schedules. Delta, when it reported, said its performance turned around in March.

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United, in March, said it expected its overall flight capacity — or the amount of available seats and flights it offers — to shrink in the first quarter and year ahead. It cited the omicron surge earlier this year, flight cancellations related to “current geopolitical conditions,” fuel costs and aircraft delivery delays as reasons.

Still, it offered a more upbeat revenue forecast for the first quarter, helped by a rebound in business travel demand. United said it expected fuel to cost around $2.99 per gallon in the first quarter. It said it expected to reach positive adjusted pretax income in the second quarter.

At an airline analysts’ conference last month, United’s Chief Commercial Officer, Andrew Nocella, said that rising fuel costs and the war in Ukraine would delay United’s full recovery.

Similar to Delta, he said United had been able to upsell customers on premium seats. And as flight-ticket prices start to rise, he said, “At this point, there is no demand destruction.”

“In fact, it’s the exact opposite,” he said. “There’s a lot of demand to fly for leisure customers, and business is catching up quickly, although we have a ways to go.”

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American Airlines Earnings

Estimates: Wall Street expects American Airlines to lose $2.40 per share. Revenue is expected to climb 119% to $8.779 billion.

Results: Due Thursday morning.

American Airlines stock has a 48 Composite Rating. The EPS Rating is 50.

American this month also forecast improved revenue for the quarter. But it also said it expects higher unit costs and fuel costs.

American Airlines reports as Robert Isom takes over as CEO, following the retirement of Doug Parker. He’ll take the helm after American and other airlines racked up more debt in an effort to stay afloat during the pandemic.

American Airlines ended last year with debt of $46 billion, which Third Bridge said was the highest in the U.S. airline industry. The carrier has said it hopes to pay off $15 billion of debt by 2025.

Fitch, in March, said American had more than enough liquidity to manage its debts in the short term. And Parker, at a conference last month, said the industry over the years has become more financially disciplined.

“What changed was a global pandemic,” he said. “During the pandemic, our industry has gotten more structurally sound. So, when the effects of the pandemic disappear, what will reappear is an even stronger airline industry than before.”

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